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Axis Focused 25 Fund: Successful Focused Strategy
Tue, May 22, 2018
Source : Yash Jashnani, Citrus Interactive

Axis Focused 25 Fund is an open ended focused large cap oriented equity diversified fund. The primary objective of the scheme is to generate long term capital appreciation by investing in a concentrated portfolio of equity and equity related instruments of up to 25 companies. The fund has assets under management (AUM) of Rs. 3,714 crore as on 30th April 2018 which has increased by Rs 2,407 crore compared to last year as on 30th April 2017.

Performance

The fund’s performance across various time horizons is extremely good as seen in the table below. It has outperformed its benchmark in all the time periods. It has also outperformed the category average in all the time periods.

Scheme Name

YTD

6 Months

1 Year

3 Years

5 Years

Since Inception

Axis Focused 25 Fund

3.64

10.44

23.97

17.59

18.49

19.01

NIFTY 50 – TRI

2.37

4.36

17.01

10.89

14.03

16.13

Category Average

-1.5

3.28

13.96

13.31

20.03

NA

Rank

7/153

8/151

10/147

26/143

64/129

NA

Figures are in % as on 30th April 2018; Returns above 1 year in Compounded Annual Growth Rate (CAGR) terms

In terms of the calendar year returns the fund has beaten its benchmark in all time periods except in 2013. It has generated higher returns than the equity diversified category in 2013, 2015 and 2018 but has underperformed in 2014 and 2016 compared to its category average, the underperformance being marginal in 2016.

Scheme Name

2013

2014

2015

2016

2017

Axis Focused 25 Fund

5.82

38.75

3.91

4.56

45.15

NIFTY 50 – TRI

8.07

32.9

-3.01

4.39

30.27

Category Average

4.83

55.24

3.61

4.78

38.11

Rank

60/129

111/131

59/139

71/145

23/145


Risk: In terms of measures of risk such as Standard Deviation (measured over the last 3 years) the fund has taken lower risk as compared to its category median and in terms of Beta (measured over the last 3 years), the fund has taken higher risk as compared to the category median.

 

Standard Deviation

Beta

Axis Focused 25 Fund

0.87

0.95

Category Median

0.95

0.84


Risk-Adjusted Return: In terms of risk-adjusted returns such as Treynor and Sharpe ratio (measured over the last 3 years) the fund has provided higher risk-adjusted returns than the category median.

 

Treynor

Sharpe

Axis Focused 25 Fund

0.06

0.07

Category Median

0.04

0.05


Portfolio

Sector concentration: The fund’s concentration in the top 3, 5 and 10 sectors is higher than the category median.

 

Top 3

Top 5

Top 10

Axis Focused 25 Fund

37.65

49.43

72.25

Category Median

30.37

41.06

61.07

All figures in % as on 30th April 2018

Company concentration: The fund’s concentration in the top 3, 5 and 10 companies is higher than the category median.

 

Top 3

Top 5

Top 10

Axis Focused 25 Fund

22.14

33.92

57.43

Category Median

16.05

24.46

39.98

All figures in % as on 30th April 2018

Number of Equity Holdings: The fund currently holds 23 stocks in its portfolio (30th April 2018), which is lower than the median stock count of the equity diversified category, which currently stands at 50. In the last 5 years the equity holding averages to 24.

Cash Equivalent:        

Its cash equivalent for April 2018 was 6.62%. The average cash allocation for the last five years is 2.67%. Its maximum allocation to cash over the last two years is 9.52% in August 2017 and lowest was 0.73% in June 2016. In 2018 it had an average cash allocation of 4.27%.

Portfolio Characteristics:

The top 5 sectors include Bank – Private, IT - Software, Auto Ancillary, Automobiles - Passenger Cars and Plastic Products

In the last 6 months the fund has bought stocks of Bandhan Bank Ltd., HDFC Standard Life Insurance Co Ltd, Mindtree Ltd, Tata Consultancy Services Ltd. and Bajaj Auto Ltd.

Stocks of Cummins India Ltd., Godrej Agrovet Ltd, Quess Corp Ltd. and Mahindra & Mahindra Financial Services Ltd have been dropped from its portfolio and stocks of Infosys Ltd., Sun Pharmaceutical Industries Ltd. Tech Mahindra Ltd. and JM Financial Ltd. have been bought and later sold from the portfolio.

Process

The fund will invest in a concentrated portfolio of equity and equity related instruments of up to 25 companies. The portfolio will be built utilising a bottom-up stock selection process, focusing on appreciation potential of individual stocks from a fundamental perspective. The AMC employs a "Fair value” based research process to analyse the appreciation potential of each stock in its universe (Fair value is a measure of the intrinsic worth of a company). The universe of stocks is carefully selected to include companies having a robust business model and enjoying sustainable competitive advantages as compared to their competitors.

While 65 - 100% of the corpus will be invested in equities (no less than 20 companies and up to 25 companies), it is expected that under normal market conditions at least 80% of the corpus will be invested in equities (no less than 20 companies and up to 25 companies).The Scheme will primarily invest in companies among the top 200 in terms of market capitalization.

The scheme would invest 65-100% in Equity & Equity Related Securities of not exceeding 25 companies of which 90-100% would be invested in companies among the top 200 in terms of market capitalization The scheme would also invest 0-25% in Debt and Money Market Securities.

Investment in Securitized debt (excluding foreign securitized debt), if undertaken, would not exceed 20% of the net assets of the Scheme.

Fund Manager

Jinesh Gopani

Mr. Jinesh Gopani has been a Fund Manager of Equity at Axis Asset Management Company Limited since April 1, 2011. Mr. Gopani previously served as an Assistant Fund Manager of Equity at the firm from October 21, 2009 to March 31, 2011. He has a total experience of 13 years in the capital markets of which four years are in equity fund management.

Mr. Gopani previously served as a Portfolio Manager at Birla Sun Life Asset Management Company Ltd. from June 2008 till October 2009. Before that, he was a Research Analyst and Portfolio Manager at Voyager India Capital Pvt. Ltd. from February 2006 to May 2008.

Mr. Gopani served as a Research Analyst at Emkay Share & Stock Brokers Ltd. from June 2002 till February 2006. Prior to that, he was a Research Analyst at Net worth Stock Broking Ltd. from May 2001 to May 2002.

Mr. Gopani serves as Fund Manager of various funds in Axis Mutual Fund complex. He serves as Assistant Fund Manager of Equity at Axis Mutual Fund - Axis Long Term Equity Fund, Axis Mutual Fund - Axis Midcap Fund, Axis Mutual Fund - Axis Hybrid Fund - Series 1, and Axis Mutual Fund - Axis Hybrid Fund Series 2.

Mr. Gopani holds a degree in M.M.S. in Finance from Mumbai University in 2001. He has also earned a B.Com. Degree.

Our View

As per the new SEBI mutual fund categorization norms, this fund is classified as a Focused Fund. As the name suggests the fund maintains a concentrated high conviction portfolio which increases the risk to some extent. The fund manager stock picking skills have proven to be good which has translated into good performance. It can be considered for the large cap allocation in the investor’s portfolio.

 
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